Perfect World Jumps as Retail Sales Lift ADRs: China Overnight

Chinese stocks rose to a five-week high in New York as better-than-expected U.S. retail sales boosted the outlook for the Asian nation’s exports.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. added 0.6 percent to 92.45 yesterday, the highest level since July 5. Online games developer Perfect World Co. surged 6.1 percent as Citigroup Inc. recommended buying the stock. Yingli Green Energy Holding Co. climbed for the first time in three days while China Eastern Airlines Co. rallied. Phoenix New Media Ltd. sank to a six-month low after its forecast missed estimates.

U.S. retail sales increased 0.8 percent in July, the first gain in four months, after a 0.7 percent drop in June, Commerce Department figures showed yesterday. Economists projected a 0.3 percent advance, according to the median forecast of 85 economists surveyed by Bloomberg. Chinese government data showed last week that July exports grew 1 percent after climbing 11.3 percent in June.

“The market was up with a flicker of good news from the U.S.,” Steven Bell, who manages $600 million in assets as principal portfolio manager at hedge fund GLC Ltd. said by phone yesterday from London. “The disappointment in Chinese data recently was heavily focused on exports. What you need to drive China’s exports is better demand from U.S. consumers.”

China ETF Advances

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., climbed 0.8 percent to $35.20, snapping a two-day drop. The Standard & Poor’s 500 Index of the biggest U.S. shares ended little changed at 1,403.93.

China’s July export growth trailed the 8 percent median estimate of 32 analysts. Separate government reports showed last week industrial output growth in July unexpectedly slowed to 9.2 percent from a year earlier, the least since May 2009, Consumer prices rose 1.8 percent last month, the slowest pace since January 2010. Policy makers cut interest rates in June and July after two reductions in reserve-requirement ratios for banks this year.

“We’ve just come across the latest Chinese monthly data which was across the board much weaker than expected. The scope for more policy stimulus still looks very clear. That’s really what people are waiting for,” Erik Lam, director of Asian equity sales at Auerbach Grayson & Co., said by phone from New York yesterday.

Perfect World, China’s fourth-biggest online games operator based in Beijing, jumped to $10.94, the highest level since May

29. Citigroup set a price target of $20.41 for the stock as they initiated coverage with a buy rating.

Perfect World Forecast

The company said in May one-fourth of its sales were from overseas operations. This portion is expected to rise to 30 percent of 2012 revenue, the Shanghai Daily reported July 27, citing Chief Executive Officer Chi Yufeng.

Giant Interactive Group Inc., a Shanghai-based online games developer, advanced 4.1 percent to $4.79, the highest level in a month.

Yingli Green Energy Holding Co., the world’s sixth-largest silicon-based solar module producer, surged 6.8 percent to $1.89, a two-week high. Trina Solar Ltd., the fourth-largest maker, climbed 4.1 percent to $4.79, snapping a two-day slump.

AutoNavi Holdings Ltd., a provider of digital map data in Beijing, gained 3 percent to a one-month high of $12.89 in New York.

AutoNavi, China Eastern

The company reiterated its forecast for a 2012 sales growth of as much as 25 percent from last year to $159 million, exceeding the $157 million average estimate of six analysts. Its second-quarter sales rose 22 percent from a year earlier to $40.2 million, and net income declined 8.1 percent to $8.8 million, it said.

American depositary receipts of China Eastern, the second-biggest domestic carrier, gained 1.8 percent to $17.40, the most since July 27.

Phoenix New media, a Beijing-based Internet, TV and mobile-news provider, tumbled 8.3 percent to $3.76, the steepest decline since Feb. 6.

The company said on Aug. 13 that it forecasts third-quarter revenue between 266 million yuan to 279 million yuan, below the average estimate of 357 million yuan of three analysts surveyed by Bloomberg. Second-quarter profit per American depositary share was 0.43 yuan, compared with analysts’ estimate of 0.6 yuan.

Morgan Stanley cut the price target for the stock to $7.6 from $8.9 in a research note yesterday, citing its “soft” ad sales outlook.

Phoenix’s board approved a plan to repurchase as much as $20 million worth of American depositary receipts within 12 months, the company said in the statement.

The Shanghai Composite Index gained 0.3 percent yesterday to 2,142.52 while the Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong rallied 1 percent to 9,915.44, the most in a week.

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